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Former Deputy Governor of the Bank of Ghana and two-time Vice Presidential Candidate of the main opposition New Patriotic Party, Dr Mahamudu Bawumia, has accused the current NDC Government of "borrowing the equivalent of $20 billion in just the last five years." "What is worrying is that they tell us that this is only the first gear! Can you see or feel that $20 billion dollars has been pumped into this economy in the last five years? Where are the projects to show for the $20 billion? Just imagine the transformational effect if every region were given $2 billion for development projects,� Dr Bawumia said when he delivered the inaugural Aliu Mahama Memorial Lecture to launch the Aliu Mahama foundation in honour of late Vice President. Below is the full speech read by Dr Mahamudu Bawumia. DISCIPLINE IN ECONOMIC MANAGEMENT: THE KEY TO SUSTAINABLE GROWTHAND PROSPERITY Speech Delivered by: Dr. Mahamudu Bawumia At the: ALHAJI ALIU MAHAMA MEMORIAL LECTURE NOVEMBER 13, 2013 ACCRA Mr. Chairman, H.E. John Agyekum Kufuor, Former President of the Republic of Ghana Honourable Ministers of State Honourable Members of Parliament Chiefs and Traditional Leaders Members of the Diplomatic Corps Representatives of other Political Parties Members of the Media Distinguished Invited Guests Fellow Ghanaians Ladies and Gentlemen Assalamu Alailkum and Good evening! I would like to thank all of you for making the time from your busy schedules to be present at this inaugural Alhaji Aliu Mahama Memorial Lecture. I am very humbled to have been asked by the Foundation to deliver this first lecture. In fact, when the request came, I thought there must have been some mistake as I felt someone else more qualified, perhaps a statesman like our Chairman, should be the one giving this lecture. I am truly honoured for the opportunity. I would like to thank the Aliu Mahama Foundation and the family for organizing the anniversary celebrations to honour our former Vice-President who was also a humble, generous and decent human being. I had a very personal relationship with Alhaji and he treated me like a son. He was determined to do all he could to support me as he had done for numerous others. We campaigned together in the 2012 presidential election campaign until he was taken ill. He was a first class gentleman and all who met him would attest to that. He also had a good sense of humour. Mr. Chairman, distinguished ladies and gentlemen, tonight I will be talking about an issue that was very close to the heart of H.E. Alhaji Aliu Mahama, the issue of discipline. Discipline can be defined as the practice of training people to obey rules or a code of behavior or using punishment to correct disobedience. For Alhaji Aliu Mahama, a society without discipline is doomed to failure. He always lamented about how we as a people are always so inclined not to follow laid down rules or codes of conduct. In the area of sanitation for example he often wondered how long it would take us to have as clean an environment as in many advanced countries when the practice of open littering, urination, defecation and occurred with such regularity without public disapproval. For Alhaji Aliu Mahama, it was clear that the discipline that we seek would require a change in attitudes through public education, investment in infrastructure, rigorous enforcement of planning regulations, and a National Identification database to assist in planning and law enforcement. Mr. Chairman, I now want to turn my attention to the issue of discipline in economic management. Discipline in economic management has three elements: � having a clear vision of what a government or a leader wants to do � the discipline to follow through on implementing the vision and � the fiscal and monetary discipline to manage the implementation of the vision Fiscal discipline basically means spending within your means over a period of time. We know that any individual who consistently spends above his or her means would end up in trouble, like the infamous Abankaba. It is no different for a country. Monetary discipline on the other hand involves the central bank matching the money supply with the level of production or foreign exchange reserves in a country. Excess printing of money results in inflation. Going back into history, so important was maintaining monetary discipline in England that by 1121, 900 years ago, when there was a noticeable decline in the quality of England�s silver, all the Mint Masters in England (those who �minted� the money, equivalent to central bank governors) were assembled and punished by having their right hands cut off! . This was a rather draconian method of monetary control but it speaks to the historic importance attached to monetary discipline in some countries. Mr. Chairman, developing countries have huge gaps in sectors such as roads, water, energy, education, health, agriculture, etc. The problem that governments face is one of insufficient financial, institutional and human capital resources to solve these problems. Governments therefore have the onerous responsibility to manage the resources of the country to meet the aspirations of its current citizens as well as future generations. While it is clear that accomplishing these goals require fiscal and monetary discipline, the lesson from history is that the temptation to abandon discipline for political expediency is very high. 1957-1966 Mr. Chairman, at independence, the Convention Peoples Party (CPP) under the leadership of President Kwame Nkrumah espoused and pursued an ideology of socialism, advocating the collective or governmental ownership and administration of the means of production and distribution of goods. The CPP inherited from the British, a healthy amount of foreign exchange reserves of $273 million, (the equivalent of $2.275 billion today). In addition, there was virtually no external or domestic debt and Ghana�s population was only 6.5 million. To put this in perspective, in 2008, Ghana�s gross international reserves were $2.03 billion, with a total debt stock of GH�9.5 billion ($8billion) and a population of some 23.0 million. The CPP did not therefore face the typical economic pressures faced by all other Ghanaian governments upon assuming government. I think the CPP is the only government in our history that has not said �The country is broke� when they came to power. They had no reason to. The CPP quickly set about implementing Nkrumah�s vision of state-led industrialization. Fiscal policy was therefore expansionary. Expenditure on education, health, and physical infrastructure such as schools, roads, dams, hospitals, electrification and so on dramatically increased from their colonial levels. The inherited foreign exchange resources financed development projects such as: � Tema Harbour � Cape Coast University � Kwame Nkrumah University of Science and Technology, � Accra-Tema Motorway, � Akosombo dam, � Black Star Line, � Construction of numerous schools and hospitals, � Ghana Medical School � Okomfo Anokye Hospital � Ghana Atomic Energy Commission � State-owned enterprises like Ghana Airways, Tema Food, GNTC, State Hotels etc Complex, GIHOC, � State farms Nkrumah�s development plans soon confronted the strict arrangements for monetary discipline contained in the West African Currency Board. Mr. Chairman, at independence, the Gold Coast was operating with the colonial international economic arrangements. The British West African Currency Board (WACB) was constituted in 1912 to control the supply of currency to the British West African Colonies. The exchange rate of the West African Pound to sterling was fixed. Under this regime, government could not just print money without backing it with an increase in foreign reserves. This framework kept inflation barely noticeable. In fact, at the time of independence in 1957, Ghana�s inflation was less than 1 percent and a year later was zero. There was no exchange rate depreciation to worry about against the pound sterling. Nkrumah however wanted a banking system that would complement the CPP�s government-led development strategy. It should be noted that the Bank of Ghana was established in 1957 when the Bank of Ghana Ordinance was passed by the British Parliament. The Ordinance was designed to protect the central bank from political interference and prevent the use of the Bank�s and the country�s resources indiscriminately. The Central Bank in 1957 was designed to enforce monetary discipline in a manner akin to the WACB arrangements. By 1960, the Convention Peoples Party was becoming increasingly frustrated with the apparent autonomy of the Bank of Ghana. In fact, this frustration became more strident as Government finances were coming under severe pressure and the foreign exchange reserves were declining. The Government deficits were rising and unlike the earlier years when foreign exchange reserves were relatively plentiful, by 1960, the option of using foreign reserves to finance the deficit was limited. Government also exhausted its bank balances and started borrowing from the banking system. The Government of Ghana began to issue Treasury Bills in 1960. Exchange controls and import licensing were introduced in 1961 under the Exchange Control Act to limit further loss of foreign exchange reserves. A Bank of Ghana Act of 1963 was passed to break from the monetary discipline that was imposed by the WACB arrangements. Dr. Nkrumah wanted it all. He wanted a central bank that could print money as needed but at the same time he wanted to have a fixed exchange rate for the cedi. He was basically defying the laws of economics and it was only a matter of time before the center could not hold. Nkrumah�s ambitious development program took its toll on the economy. Many of the state-owned enterprises were operating at a loss and adversely impacting public finances. The fiscal position also deteriorated as Government spending increased from 9.5 percent in 1957 of GDP to 25.8 percent of GDP by 1965. The government budget balance deteriorated from a surplus of 14.5 percent of GDP in 1954 to a deficit of 6.4 percent of GDP by 1965. The external reserve position deteriorated significantly between 1957 (when net reserves stood at $269 million) and 1966 when they stood at (-$39 million). Ghana, with so much in foreign reserves at independence, was broke by 1965. The deteriorating economic and political situation was used by a group of military and police officers, (National Liberation Council) as an excuse to stage a coup d�etat and overthrow the CPP on February 24, 1966. 1966-1972 Mr. Chairman, on coming into office, the NLC immediately embarked on an IMF supported stabilization program aimed at improving the adverse balance of payments, cutting the budget deficit, reducing the government sector, and stimulating private enterprise. There was a reduction in absolute investment, tighter control over import licenses and a devaluation of the cedi. The objective of the stabilization was largely achieved. The balance of trade moved into surplus and the current account and the government budget deficits were reduced. Inflation fell from an average of 18.0 percent between 1964-66 to a single digit average of 9.0 percent between 1967-69 The NLC announced a transition to civilian rule with general elections to be held in 1969. The Progress Party won the 1969 elections under the leadership of Dr. K.A. Busia and inherited an economy struggling to recover from the fiscal excesses and debts of the Nkrumah era. Busia�s vision and philosophy was very different from that of Nkrumah. Dr. Busia�s vision was founded on the principles of free governments, representative governments, multiparty democracy, free press, the rule of law and principles of democratic accountability. The Busia Government made significant strides with its rural development agenda in a short period of time but by 1971, the economic situation was aggravated by a dramatic drop in cocoa prices resulting in a balance of trade deficit. The government responded with a devaluation of the cedi by 42.0 percent in December 1971 and cuts in government expenditure. The attempt to impose fiscal discipline was not allowed by the military to work. The devaluation and economic difficulties provided the pretext for a coup d�etat on 13th January 1972 by the National Redemption Council in 1972 under Colonel I.K. Acheampong. 1972-1983 Mr. Chairman, For Ghana�s economy, the period between 1972 and 1983 under the NRC, SMC, AFRC and PNP governments was characterized by a dramatic economic decline underpinned by indiscipline in economic management. This entailed a decline in GDP per capita by more than 3 percent a year. The main foundation of the economy, cocoa, was on the decline. Central government revenues which amounted to 21 percent of GDP in 1970 fell to only 5 percent of a smaller GDP in 1983. The revenue collapse increased the reliance on the banking system to finance expenditures. Between 1974 and 1983 the monetary base expanded from 697 million to 11,440 million cedis. The loss of monetary discipline accelerated inflation, which increased from 6.5 percent in 1969 to 116.5 percent by 1977 and 122 percent by 1983, all in the midst of a regime of controlled prices. In the meantime, successive governments continued the policy of overvaluing the cedi by maintaining a fixed exchange rate in the face of high inflation. Governments responded with import controls which fell disproportionately on consumer goods. A kalabule or informal economy evolved and the black market thrived. It is not surprising that this decade, 1972-1983, represents the worst economic performance in Ghana�s history. The Supreme Military Council was overthrown by another coup d�etat in 1979 by the Armed Forces Revolutionary Council (AFRC) under the leadership of Flt. Lt. Jerry John Rawlings. After four months in office, the AFRC handed over power to a democratically elected government of the Peoples National Party (PNP) under the leadership of Dr. Hilla Limann. Dr. Limann inherited very difficult economic circumstances. The country was once again broke. Attempts to resuscitate the economy included negotiations for an IMF loan. The IMF insisted that the government devalue the cedi. Cognizant of what had happened to the Busia government, the PNP refused to devalue the cedi. For the IMF, a refusal to devalue equaled a lack of commitment to fiscal and monetary discipline and the IMF also refused to grant the much needed loan. The economy deteriorated amidst internal power struggles within the PNP. The PNP government was overthrown in another coup d�etat, by Flt. Lt. Jerry John Rawlings in December 1981, this time under the banner of the Provisional National Defence Council (PNDC). The PNDC accused the PNP of economic mismanagement and corruption. Mr. Chairman, between January 1982 and November 1983 the PNDC was characterized by socialist revolutionary policies. The business community, large scale farmers and professionals were the regime�s declared enemies. Economic policy was interventionist and anti foreign capital. Price controls, import duties and tariffs were imposed on a wide range of goods. Citizens Vetting Committees (CVCs) were empowered to investigate people �whose lifestyle and expenditure substantially exceeded their known incomes�. Specifically, anyone with more than �50,000 ($1,250 at the prevailing black market exchange rate of some �50/$) had to appear before the CVC to explain how they acquired it. The wealthy became the targets of a vindictive Public Tribunal system. Not withstanding all these supposed �anti-corruption� measures, the economy turned for the worse and it soon became obvious that the populist socialist policies were not sufficient to stabilize a monetary system or grow an economy. Inflation reached 122.8% at the end of 1982 as more money was printed to finance government budget deficits. Fiscal indiscipline and bad policies were again adversely affecting the economy. 1983-2000 In its 1983 Budget, the PNDC moved Ghana away from Kwame Nkrumahs�s socialist economic philosophy towards Busia and Danquah�s capitalist free market philosophy that the government railed so much against at its inception. The PNDC proceeded to implement an IMF supported Structural Adjustment Programme (SAP). One of the most important reforms of the SAP was to allow a gradual liberalization of the market for foreign exchange. The official exchange rate was adjusted in stages from �2.75/US$ in 1983 to �90.0/US$ by January 1986. In February 1987, the official exchange rates were unified at �150/US$. To bridge the gap between parallel and official exchange rates, foreign exchange bureaus were established in February 1988, leading to the virtual absorption of the parallel foreign exchange market. The cedi exchange rate therefore became market determined. A major plank of the SAP was the rehabilitation and provision of physical infrastructure to help improve productivity. The economy responded positively and output increased. GDP growth, which was negative and declining in the three years before the SAP, recorded a remarkable recovery to register an average of some 5.0 percent per annum between 1984 and 1991. Macroeconomic stability was also restored between 1984 and 1991 and the stability was not attained at the expense of growth. Inflation declined from some 122 percent in 1983 to 10.0 percent by 1991 reflecting fiscal discipline. Mr. Chairman, The economy, between 1983 and 1991, benefited from a disciplined implementation of the government�s vision along with the fiscal and monetary discipline to accompany its implementation. However, the economic policy framework which had brought about macroeconomic success in the 1983-1991 began to unravel with the transition from the PNDC to the NDC after the 1992 elections. The economic and structural reforms slowed just as the gains of the market reforms became evident. Fiscal and monetary policy were not firm, and the public sector�s borrowing led to a large build up of external as well as domestic debt, with an increased dependence on external donor inflows. The core problem of the lack of fiscal and monetary discipline in economic management that had plagued successive governments between 1957 and 1983 had reared its ugly head once again. In the run-up to the 1992 elections, government expenditure increased dramatically as tax administration weakened. Notwithstanding the decline in government revenue, government expenditure increased at a rapid pace in the election year. As a result of these developments, the overall government budget deficit, which had declined to 1.3 percent of GDP in 1991 increased sharply to 9.4 percent of GDP in 1992. In the run up to the 1996 elections, fiscal indiscipline reared its head again. As in 1992, there was significant erosion in the government�s revenue base, including a shortfall in petroleum revenue. The shortfall in petroleum tax was the result of the suspension of the automatic price adjustment formula as the elections drew closer. Again, notwithstanding the revenue shortfall, expenditure was maintained at about the same levels as a percentage of GDP (some 30 percent of GDP) as had been the case since 1993. The fiscal stance in 1996 resulted in an overall budget deficit of 9.5 percent of GDP (the same as in 1992). In response to the policy slippages, the IMF and World Bank suspended support to Ghana as they had done in 1992. The vulnerability of the Ghanaian economy in the face of persistently high fiscal deficits and declining foreign exchange reserves was to be exposed when after the economy was hit in 1999/2000 with falling prices for Ghana�s two main exports, cocoa and gold and rising prices for oil. The excessive fiscal expansion in the run-up to the 2000 Presidential and Parliamentary elections tipped the economy into a cycle of inflation and currency depreciation. In the short span of one year ending December 2000, the cedi, lost 50 percent of its value vis-�-vis the US dollar. The country�s gross international reserves were so depleted that it could not cover a month�s imports. The debt burden of the economy increased dramatically during the structural adjustment period, with external debt/GDP ratio rising from 27 percent of GDP in 1984 to 103 percent of GDP by 1994 and rose further to 182 percent of GDP by 2000. The country was having difficulty servicing its debts. It was against this background that the December 2000 Presidential and Parliamentary elections took place and were won by the New Patriotic Party (NPP) under the leadership of President John Agyekum Kufuor, ably supported by H.E. Alhaji Aliu Mahama. 2001-2008 Mr. Chairman, under the leadership of President Kufuour (2001- 2008), Ghana made significant strides. Without the benefit of oil production, economic growth increased from 3.7% in 2000 to 8.4% in 2008. In the process, the size of Ghana�s economy increased from some $5.1 billion to $28.5 billion, a six-fold increase. Even in the face of a global economic and financial crisis in 2007/8 (with oil prices reaching a record high of $147/barrel) economic growth in 2008 rose to 8.4%. Ghana was transformed during the period of the NPP�s tenure (2001-2008) from a low income HIPC economy to a lower middle income economy on the frontiers of emerging market status. We were ready to take-off and had left the first gear a long time ago! The stabilization in most of the macroeconomic indicators between 2001 and 2007 was achieved by strictly limiting the central government�s borrowing requirements. This involved a lot of discipline on the part of government. The Debt to GDP ratio (thanks to the successful HIPC completion) was reduced from 182% in 2000 to 32% by 2008. These developments resulted in a crowding-in of the private sector as bank lending to the private sector increased together with bank deposits. Government finances also improved, especially between 2001 and 2005. The government budget balance as a percent of GDP declined from 8.6 percent of GDP in 2000 to 2.0 percent of GDP by 2005. In Ghana�s recent economic history 2004 is the only election year in which economic discipline and stability was maintained. The fiscal deficit to GDP was 3.2% in 2004. The budget deficit however increased to 6.5 percent of rebased GDP in 2008. Fiscal indiscipline had again reared its head in an election year. The fiscal slippage in 2008 was the result of government subsidies of utilities, election year wage increases. Exchange rate stability also returned to the foreign exchange market between 2001 and 2007. The exchange rate depreciation vis-�-vis the US dollar was 4.5 percent over the year 2003, and 2.2 percent for the year 2004, 0.9 percent in 2005, 1.1 percent in 2006 and 4.8 percent in 2007. Between 2004 and 2007, the cedi depreciated by an average of 2.25 percent against the U.S. dollar. Placed in the context of the historic instability of the cedi and the 2000 experience of some 50.0 percent depreciation, this level of stability of the cedi was remarkable. The period between 2001-2007 recorded the lowest depreciation of the cedi in any seven year period since exchange rates were market determined and demonstrates that it is possible to have very stable exchange rates with disciplined economic management. The deterioration in the fiscal situation in 2008 resulted in an exchange rate depreciation of 20.1%. 2009-2013 Mr. Chairman, the elections of 2008 brought in a government of the NDC under the leadership of Prof. J.E.A. Mills. The NDC inherited an economy growing at 8.4% without the benefit of oil production. With crude oil coming on stream, the economy grew by some 15% in 2011 as a result of oil production. The non-oil sectors of the economy, in particular agriculture, industry and services are still growing slower than they did in 2008. In 2012, real GDP growth was 7.9 percent (including oil). It is clear therefore that notwithstanding the production of oil, the non-oil sectors are experiencing declining growth. There is a noticeable slowdown in economic activity and both business and consumer confidence have weakened. The economic slowdown has meant that unemployment is getting worse. We all know of school leavers and graduates who are having great difficulty finding a job in this economy. Youth unemployment remains high and increasing and there has been no better Ghana for our youth in the last five years. Mr. Chairman, this is worrying because we seek fiscal and monetary discipline not for their own sake but to create an enabling environment for job creation. Mr. Chairman, at the end of 2012, Ghana�s budget deficit was a gargantuan GH�8.7 billion, amounting to 12.0% of GDP using the rebased GDP numbers. This is the highest recorded budget deficit in Ghana�s history. The GH�8.7 billion deficit would have been able to finance seven years of free secondary school education. From Nkrumah through Acheampong, Rawlings and Kufuor, no government has incurred this level of budget deficit. The crux of the problem is that government spending in 2012 increased astronomically to 34.5% of GDP even though government revenues amounted to 16.1% of GDP (a gap of over 100%) for the year. The government abandoned all fiscal discipline in an attempt to win the 2012 elections. Mr. Chairman, this NDC government is the first government in the history of Ghana to have access to oil revenues and yet is finding it difficult to pay its bills because of the indiscipline in its management of our public finances. Even meeting statutory payments like GETFUND, NHIS, DACF as well as salary payments to workers has become problematic. The cost of doing business has increased and confidence in the Ghanaian economy has waned with high interest rates, a weakening currency and increased utility prices. The Free maternal care, school feeding and national health insurance programs to protect the poor and vulnerable inherited by the NDC government are having major challenges, to put it mildly. What is remarkable about this state of the economy is that it is occurring at a time when the government has had access to more financial resources in terms of tax and non-tax revenues as well as borrowing more than any other government in Ghana�s history. Mr. Chairman, the rate of growth of public debt is a matter of concern. Ghana�s total public debt has increased from GHC 9.5bn in 2008 to GHC43.9 billion as at August 2013 (an increase of 357% in less than 5 years)! Mr. Chairman, the NDC government has borrowed the equivalent of $20 billion in just the last five years! What is worrying is that they tell us that this is only the first gear! Can you see or feel that $20 billion dollars has been pumped into this economy in the last five years? Where are the projects to show for the $20 billion? Just imagine the transformational effect if every region were given $2 billion for development projects. Mr. Chairman, what is sad about this situation is that the government appears to have misunderstood its own capacity to borrow by blindly looking at the debt to GDP ratio without taking into account the fact the GDP was rebased (i.e. statistically increased by 60% from 2007) without an attendant increase in foreign exchange liquidity. In this situation, taking comfort from a debt/GDP ratio of less than 60% would be misleading. For prudence, the government should be applying an adjustment factor to the traditional debt/GDP measure to take account of the rebasing that took place. Despite warnings in this regard, the government proceeded to borrow at an alarming rate. Today it is obvious that the indiscipline of its borrowing is taking a toll on the economy. With such large scale borrowing, government is crowding out the private sector which is unable to borrow to grow their business. Risk free Treasury bill rates are around 23% and bank lending rates are on the rise because of excessive government borrowing. Lending rates are now some 30 percent. Electricity and water supply have been erratic and inadequate, shooting up the cost of doing business. It is therefore not surprising that businesses are having a hard time in Ghana right now. After being in denial for the last couple of years, the true state of the economy is now obvious for all to see �fiili fiili�, as they say in my neck of the woods. The propaganda has finally given way to reality and it is not a pretty sight. How did we get here? Ladies and Gentlemen, with regards to government finances, we recall that at the end of 2008, the government budget deficit to GDP ratio stood at 6.5% (after the rebasing of GDP). This outcome was described by the NDC as bad fiscal management. By the end of the election year 2012, the budget deficit had reached some 12% of GDP (after rebasing of GDP). This is double the deficit in 2008 which the NDC described as reckless! Interestingly, Mr. Chairman, today the NDC government�s objective in the medium term is to get to a budget deficit to GDP ratio of 6.5%, the same as was the case in 2008, which they called reckless! This is what is called reverse gear, not first gear. Single Spine Salary Implementation and the Economy Mr. Chairman, the NDC government, in the face of growing labour unrest, has tried to blame the economic meltdown being experienced on the implementation of the Single Spine Salary System. The refrain from Government is that wages and salaries of government workers account for over 70% of government revenue so workers should endure economic hardships or pick the next available flight out of the country. What are the facts? At the end of 2008, the Government wage bill amounted to GHC1.98 billion, representing 41.3 percent of total domestic revenue of GHC 4.8 billion and 46% of tax revenue. By the end of 2012, after 99% implementation of the single spine salary system, the government wage bill jumped by some GHC4.6 billion to GHC6.6 billion. While the government wage bill increased by some GHC4.6 billion between 2008 and 2012, total government revenue also increased from GHC4.8 billion to GHC15.5 billion over the same period. The increase in domestic revenue by GHC10.7 billion was more than twice the increase in the government wage bill. Indeed, by the end of 2012, the government wage bill following the implementation of the single spine salary system was 42.9% of total domestic revenues. This is not significantly different from the 41.3% in 2008. Furthermore, the 2013 budget forecast that the wage bill in 2013 would represent 35% of total domestic revenue by the close of the year. The current economic difficulties can therefore not be attributed to the single spine salary system which had been 99% implement at the end of 2012. In fact, this government was touting its �unprecedented� economic achievements, including the implementation of the single spine salary system only last year. So when did the problem arise? The acute fiscal difficulties the government is facing is directly related to the massive deficit of GHC8.7 billion (12% of GDP) incurred in 2012. This massive over expenditure has left the government cash strapped and unable to even finance statutory expenditures. Some workers have not been paid for 22 months! Mr. Chairman, I also understand five years after you and Alhaji Aliu Mahama left office, the government has still not paid you your entitlements. Mr. Chairman, the data available therefore shows quite clearly that the blame for the current economic difficulties lies squarely in the area of government economic mismanagement and should not be blamed on the wages of workers. After all, workers did not decide to distribute V8 land cruisers and other goodies to try to win the 2012 elections, neither did workers decide on an unsustainable path of accumulation of public debt. Workers did also not make the decisions on GYEEDA, SUBAH, SADA, ISOTOFON, WAYOME, AAL, etc. In trying to reign in the fiscal deficit, government has imposed taxes on almost everything, including condoms and cutlasses and I am sure more taxes are coming in the budget to be read next week. Government has also increased utility tariffs, water tariffs, petroleum prices etc. Unfortunately, when as a result of poor economic management workers demand higher salaries, some politicians conveniently turn around to accuse them of being unpatriotic or greedy. After the government does the �kukrukukru� with the economy they do not want the workers to do the �kekrekekre� to protect their standard of living! INDISCIPLINE AND THE PERSISTENT DEPRECIATION OF THE GHANA CEDI Mr. Chairman, what has been the cost of this persistent fiscal and monetary indiscipline by successive governments since independence? We can think of this in terms of the impact on economic growth, employment, interest rates, inflation, etc. I will however focus on its impact on the exchange rate of the cedi over the years. Mr. Chairman, my concern looking at the developments in the cedi exchange rate since independence is that the cedi has been on a continuous one direction slide. The only question is how fast the depreciation is for different governments! Let�s look at some numbers. At independence, Ghana was part of the West African Currency Board using British Pounds, shillings and pence. The exchange rate was the equivalent of 73 pesewas to the US dollar. By 1965, Dr. Kwame Nkrumah introduced the Cedi. The exchange rate at this time was �1.04/$. By 1983, the exchange rate was �52.6/$. By 1992, the exchange rate was �520.8/$.By 2000, the exchange rate was �7047/$. By 2008, the exchange rate was GH�1.19/$ (�11,900/$) in 2008. By October 2013, the exchange rate was GH�2.20/$ (�22,000/$) with all indications that it could decline further by the end of the year. At this rate, the exchange rate could be GH�4.4/$ in another 4 years. Table 1. Cedi-US Dollar Exchange Rates (1965-2013) Year Exchange Rate �/$ 1957 0.73 1965 1.04 1983 52.6 1992 520.8 2000 7047 2008 11,900(GH�1.19) 2013 (October) 22,000 (GH� 2.20)